Is the economy low on gas as we round the corner here in Mid 2011? Many economic indicators appear to show that, and one of the best indicators as to the strength of the middle class, consumer confidence, and GDP growth is the auto industry. Okay so, let’s discuss this for a minute, where are we exactly?
There was an interesting article in the Wall Street Journal on June 9, 2011 suggests that auto production is increasing in North America; US, Canada, and Mexico, in fact the article was titled; “Mexico’s May Auto Production Up 19% on Year to 213,329 Units. Some of those cars went to Latin America, although folks should be forewarned that although some South and Central American nations are taking more auto imports, there has been a swing towards socialism and typically that means slower economic growth moving forward.
Indeed, some socialist party leaders in South America insist that their policies are moderate and GDP growth will remain steady, for instance the new Peruvian Leader, Ollanta Humala is convincing Wall Street, the IMF, and other foreign investment folks that all will be fine, as per an article in the WSJ on 6-9-11 titled “Peru’s New Leader Challenges Stock Dumpers,” also similar messages from Argentina, and Brazil as well. Perhaps so, and thus exports to South America will continue to help Mexican and US-Mexican car maker partnerships.
Meanwhile on the home front it looks as if GM’s sales growth in China is hitting a plateau as the Chinese government finds too many cars on their highways, fuel challenges, and too much pollution and therefore has cut tax cut incentives for new car sales there. However, Ford reports solid in-roads in other parts of Asia and India, and gave forward looking guidance of global sales revenue growths of 8-10%, last year their revenue growth exceed 6% so, this is good news (see: WSJ 6-8-11 “Ford Forecasts Sharp Gains from Asian Sales).
Ford has also introduced a prototype vehicle to sell in the USA, a fuel-sipping 3-cylinder car out next year, and right now with $101 per barrel oil, it can’t come soon enough for American Consumers. Of course, do not expect US Auto Makers to be giving cars away anytime soon as there are inventory challenges, for example there was an article in my local paper here titled; “Shortages Drive Up Costs; Fewer Cars Drive Off Lots” (Associated Press, Desert Sun, 6/2/11) by Tom Krisher and Dee-Ann Durbin. Another article in the USA Today confirms this reality; “Auto Recovery Pauses in May – Sluggish Economy, High Fuel Prices Cool Buying” by James A. Healey also a lead story on 6-2-11.
Less Popular Brands such as Hyundai showed major increases due to lower vehicle retail costs, according to WSJ article on June 2, 2011 titled “Hyundai Soars as Auto Sales Slip” – which seems to show the cost considerations of auto buying consumers and their mindset right now with high fuel costs. Okay so, what does all of this mean? Well, it means that the auto industry which is typically a very good indicator of our economy is not recovering as well as hoped, but it is moving, which is a positive sign. Something that President Obama noted in a Speech in Toledo OH, in the first week of June. Indeed, I hope you will please consider all this and think on it.
